Real Estate Markets Poised to Bounce
As we kicked off 2024, a majority of economists were projecting the volume of sales in the real estate market to surge upwards 20-25% from the 30+ year lows seen in 2023. That did not happen. In fact, our markets have essentially been treading water with last year, though we can see the tide turning in how the year has unfolded thus far.
According to BARIES MLS, Sonoma County had exactly 874 single-family homes left for sale at the close of October – 24 percent greater than this same period a year earlier. Sellers delivered 285 new listings to the market during the month – two percent less than in 2023 and a another new all-time low - while buyers garnered control of another 350 new deals – 25 percent more than a year ago. In support of these metrics, completed sales stood at 381 for the period – 14 percent greater than the 333 sold at this same time last year.
The continued pace of the markets can be measured by the months’ supply of inventory (MSI) and, with the Federal Reserve having now reduced interest rates we are witnessing a market restabilizing at a seller favorable reading of 2.3 – indicating that our market will likely not slip towards a balanced one and will likely remain as it has since 2011, a sellers’ market, with a more likely potential of this leading to prices moving upwards in 2025.
MSI is the metric that indicates the number of months it would take to sell the current inventory at the current rate of sales. An MSI ranging from 4.0 to 6.0 is indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.
Steadying near activity readings that are on the edge of being considered balanced, the tony town of Sonoma, which submarket includes properties throughout Kenwood and Glen Ellen, reported 138 homes for sale as October concluded – 24 percent higher than last year. This region experienced the addition of 18 new listings during the month – another historical monthly low - while buyers garnered accepted contracts on 32 more properties, 14 percent above last year’s demand levels. Sellers in the valley awarded keys to 33 new homeowners in October, allowing MSI to stabilize with a neutral reading of 4.2.
Healdsburg witnessed 18 new listings debuting in the market last month – 80 percent greater than a year ago. Buyers absorbed 13 homes in new deals while sellers closed out another 17 transactions leaving this submarket with 96 dwellings for presentation to buyers in November – 39 percent above year ago levels - culminating in an MSI reading of 5.6 – intimating that buyer’s in this submarket may exert more influence over the terms of a transaction in this region.
A different story on the southern end on Sonoma County on Petaluma’s Westside, as sellers introduced 14 new listings in October leaving available inventory at 51 homes for buyers to select from by month’s end. Home seekers grabbed 29 new deals in the period while sellers closed out another 25 purchases pressuring MSI tighter to 2.0 for the period – a market where sellers are certainly still in the driver’s seat.
Similarly, Sebastopol wrapped up the period with 40 available homes for buyers to consider, which included the 17 new offerings from property holders in October – another historic low for the period. Home shoppers placed 20 more abodes into contract while sellers completed 18 sales, allowing MSI to register at 2.2.
The two most obvious factors guiding this theory are that both available listings as well as new sales are climbing in coordination with each other over the last few months ahead of our typical seasonal slowdown that occurs during the winter holiday season. We anticipate this pausing type of condition over the next 60 days to be followed by a resurgence to where we are today, and this may catch both sides of the home sale off guard if they do not prepare for it.
This article originally appeared on PressDemocrat.com, where Jeff writes a weekly real estate column.
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